Treasury Cancels 1.3 Billion Shekel Grant to Intel
The construction of the plant expansion in Kiryat Gat has been halted for two years due to company distress, leading to the cancellation of projects in Germany and Poland. Consequently, the Ministry of Finance's Budget Department has decided to cancel a 1.3 billion shekel grant.
Intel repeatedly prides itself on its chip plant in Kiryat Gat, the only one in the world producing chips with 10-nanometer technology (under the "Intel 7" standard), stating that the Israeli facility leads the company's global AI manufacturing processes. Furthermore, Dani Ben-Atar, who was responsible for the plant's construction and for replicating its processes across the global production network, has been appointed as co-CEO of Intel's global factory network.
However, for two years now, the construction of the plant's expansion in Kiryat Gat, including two planned clean rooms, has been halted. This is due to financial distress within the company, which also led to the cancellation of plant construction in Germany and Poland, as well as the recurring wars in the Middle East.
Two years after the freeze in Kiryat Gat, the Budget Department at the Ministry of Finance has decided to cancel the grants promised back in 2023. The Ministry has revoked a 1.3 billion shekel grant that was tied to the expansion's progress in 2025, while opting to keep the 1.06 billion shekel grant planned for late 2026, in case Intel resumes investment in the facility.
In 2023, the government committed to providing 11.1 billion shekels in grants to Intel in exchange for building a new chip plant with two clean rooms next to the existing site in Kiryat Gat, with a total project budget of 89 billion shekels. At the time, the government, facing criticism from the high-tech sector over judicial reform, increased the grant rate to 12.5% of total investment and allowed Intel to pay a 7.5% corporate tax on its revenues in the south. However, by June 2024, the company informed contractors that the process was frozen until further notice. No such notice has arrived. While the Israeli plant is considered outdated and in need of upgrades, the company directed a new 5 billion euro investment to its facility in Ireland, which utilizes more modern technology (5 nanometers). Despite this, Intel received a 1.5 billion shekel grant for its 2024 operations.
The Ministry of Finance did not respond to requests for comment. Intel stated:
"As we have announced in the past, our expansion plans in Israel are under review, in order to ensure alignment with customer demand."
